Bitfarms: A Bitcoin (BTC) Mining Company – A Brief Introduction

Bitfarms is a publicly traded global Bitcoin mining company founded in 2017. The company specializes in large-scale Bitcoin mining operations, utilizing advanced data centers and specialized equipment to validate blockchain transactions and generate new Bitcoin.

Is Bitfarms a Good Investment?

Bitfarms Ltd., a Bitcoin mining company, presents a mixed investment outlook, where the potential for significant profits is counterbalanced by considerable risks. Here are the key points to consider:

Market Position and Financial Performance

Bitfarms operates as a Bitcoin mining company that heavily relies on Bitcoin prices, with approximately 98% of its revenue coming from this sector. As of Q2 2024, the company had a market capitalization of around $1.6 billion and reported an annual revenue of $229.6 million. However, it is currently operating at a loss, with a negative profit margin of -64.2%.

The company's stock has underperformed recently, dropping 37% year-over-year, despite Bitcoin prices increasing by 25% over the same period. Analysts forecast an adjusted loss per share of -$0.085 for the current fiscal year, indicating ongoing financial challenges.

Read More: Bitfarms Mines $192M Worth of Bitcoin in 2024

Investment Evaluation

Analysts have differing opinions on Bitfarms' investment potential. The average brokerage recommendation is around 1.20 on a scale of 1 (Strong Buy) to 5 (Strong Sell), indicating a generally positive outlook among some analysts. However, the stock has received poor ratings for value (F), growth (F), and momentum (F) from certain investment analysis platforms, raising concerns about its overall performance and stability.

Growth Potential and Risks

Bitfarms has demonstrated significant growth, with a quarterly sales increase of 67.1%. However, the company faces substantial risks due to regulatory scrutiny in the cryptocurrency sector and economic pressures that may push investors toward safer assets.

Additionally, Bitfarms is working to diversify its operations beyond Bitcoin mining, which could help mitigate some of the risks associated with its heavy reliance on cryptocurrency prices.

How Do Bitfarms Make Money?

As a Bitcoin mining company, Bitfarms generates its primary revenue through mining activities. Here's how the company makes money:

Bitcoin Mining

Bitfarms operates large-scale, integrated mining facilities, leveraging computational power to solve complex algorithms and validate Bitcoin transactions. In return for these efforts, the company earns Bitcoin rewards. In 2023, Bitfarms successfully mined 4,928 BTC, generating substantial revenue from its operations.

Efficiency and Economies of Scale

The company benefits from operating multiple mining sites across different countries, including Canada, the United States, Paraguay, and Argentina. These facilities primarily use low-cost hydroelectric power, enhancing profitability.

Bitfarms continuously upgrades its mining equipment to improve efficiency and reduce costs. For example, in Q3 2024, the company achieved a hashrate of 11.9 EH/s and improved energy efficiency to 21 watts per terahash (w/TH).

Read More: Bold Bid of Riot: Pursuit Bitcoin Miner Bitfarms

Revenue from Bitcoin Sales

The Bitcoin mined by Bitfarms is either held as company assets or sold in the market to generate cash flow. In Q3 2024, Bitfarms reported revenue of $45 million, with the majority coming from Bitcoin sales.

Synthetic HODL Strategy

Bitfarms also employs financial strategies to increase its exposure to Bitcoin prices, such as purchasing long-term BTC call options.

Who is the CEO of Bitfarms?

The CEO of Bitfarms is Ben Gagnon. He has been leading the company through various strategic initiatives, including recent acquisitions and operational expansions in the Bitcoin mining sector. Gagnon has emphasized the company’s focus on improving its energy portfolio and transitioning towards a more North American-centric operational model.

Is Bitfarms Ltd a Buy or Sell?

Here are key points to consider when deciding whether to buy or sell this stock:

Current Stock Performance

As of March 14, 2025, Bitfarms' stock price stood at $1.11, reflecting a slight increase of 1.83% from the previous day. However, over the past week, the stock declined by approximately 4.31%, indicating volatility and uncertainty in its performance.

Analyst Ratings

A consensus among five analysts suggests a "Strong Buy" recommendation for Bitfarms, with 60% advising a "Strong Buy" and 40% recommending a "Buy." No analysts currently recommend holding or selling the stock.

However, some technical analyses present a more cautious view, with certain moving averages signaling a sell position and an overall negative short-term forecast.

Price Forecast

Analysts project that Bitfarms' stock could reach an average price of $1.54 in 2025, with a potential high of $2.69 and a low of approximately $0.39. This reflects the potential for significant gains but also considerable risks.

Market Sentiment

Some sources have described Bitfarms as a "strong sell candidate" due to recent price movements and volume trends. Concerns have been raised about declining trading volume during price increases, which could indicate potential downward pressure on the stock.

Volatility and Risks

Bitfarms is considered a high-risk stock due to its volatility, with daily price fluctuations averaging around 4.98%. Stop-loss strategies are recommended for investors considering this stock.

What is the IV Rank of Bitfarms?

The implied volatility (IV) for BITF currently stands at 98.6, placing it in the 52nd percentile. This means that over the past year, IV has been lower than the current level 52% of the time. The current IV (98.6) represents a 9.4% increase from the 20-day moving average (90.1), indicating a rising trend in implied volatility.

Who Owns Bitfarms?

Bitfarms Ltd. has a diverse ownership structure, including institutional investors, company insiders, and the public. Here are the key details:

Major Shareholders

• Riot Platforms, Inc. holds the largest stake, owning 20.16%, equivalent to approximately 90.1 million shares.
• Other significant institutional investors include:
  • Invesco Advisers, Inc. – 2.99%
  • MMCAP International Inc. SPC – 2.99%
  • Van Eck Associates Corp. – 2.81%
  • Invesco Capital Management LLC – 2.45%

Institutional Ownership

Around 19.64% of Bitfarms' shares are owned by institutional investors, with approximately 198 institutions holding shares.

Insider Ownership

Company insiders own approximately 22.16% of the company, indicating strong confidence among management and board members in Bitfarms' future.

Public Ownership

The remaining shares are held by public investors and other entities, forming a substantial portion of the company’s total ownership structure.

Do Bitfarms Have Debt?

Yes, Bitfarms Ltd. carries debt. According to the latest financial data:

• Total debt: $32.36 million
• Total liabilities: $100.78 million
• Total assets: $196.62 million
• Total shareholder equity: $691.72 million

Although Bitfarms has debt obligations, the company is supported by significant assets and equity to sustain its operations.

What is the All-Time High for Bitfarms?

On November 9, 2021, Bitfarms Ltd. (BITF) reached its all-time high stock price of $8.87. However, the stock has since seen a significant decline and is currently trading around $1.11.

FAQ

How does Bitfarms make money?

Bitfarms generates revenue by mining Bitcoin and selling it on the open market.

What are the main challenges Bitfarms faces?

The key challenges include Bitcoin price volatility, rising energy costs, and intense competition in the mining industry.

Is Bitfarms environmentally friendly?

Bitfarms continuously works on improving energy efficiency and seeks more environmentally friendly energy sources for its operations.